2017 FINAL RESULTS PRESENTATION - Cello Health plc · •Strategic marketing •Brand and portfolio...
Transcript of 2017 FINAL RESULTS PRESENTATION - Cello Health plc · •Strategic marketing •Brand and portfolio...
© CELLO GROUP PLC
2017FINAL RESULTS PRESENTATIONMARCH 2018
© CELLO GROUP PLC 2
We supply strategic advisory services to blue-chip clients primarily in the pharmaceutical and biotech sector
▪ Global infrastructure in UK and USA
▪ Long-term client relationships with good contracted profile and visibility
▪ Low client concentration
▪ Underlying technology capability and IP
▪ Strong balance sheet
▪ Strong and growing dividend
▪ Expansion programme ongoing
▪ Name change to Cello Health Group plc
CELLO GROUP PLC
INTRODUCTION
© CELLO GROUP PLC 3
Lead ClientBrands
Significant Sub Brands
CELLO HEALTH ADVANTAGE
KUDOS RESEARCH
CELLO DEFINED HEALTH
THE VALUE ENGINEERS PULSAR
2CV
CELLO HEALTH GROUP PLC
CELLO SIGNAL HEALTH
GROUP PLC
© CELLO GROUP PLC 4
CORE CAPABILITIES
Core Capability Specialism
• Qualitative data and analysis – all types, global coverage• Quantitative analysis – all types, global coverage• Social/consumer – digital/online patients, healthcare professionals
• Strategic marketing• Brand and portfolio strategy (pre, post brand launch to loss of patent)• Early product commercialisation (managed care, market access)• Business science (analytics, decision support software and tools, advisory)• Marketing excellence (process, organisation/people development)
• Strategic communication planning (medical, scientific, consumer)• Medical communication gap analysis and evidence assessment• Medical and health consumer marketing communications• Scientific data dissemination and education • Public affairs and influencer marketing
• Digital planning and activation• Campaign management• Market research• Social media analytics
© CELLO GROUP PLC 5
CORE CAPABILITIES
Core Capability2017
Gross Profit Contribution
Key Hub Locations
23% London - UK, New York - USA
18% Farnham - UK, Pennsylvania - USA
19% Farnham - UK, Pennsylvania - USA
40% London, Edinburgh and Cheltenham - UK
© CELLO GROUP PLC 6
CORECAPABILITIES PRE CLINICAL PHASE 1 PHASE 2 PHASE 3 APPROVAL LAUNCH IN MARKET
CELLO HEALTH ADVANTAGE
CELLO SIGNALHEALTH
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SOURCES OF COMPETITIVE
ADVANTAGE
One brand, one team• Cello Health brand• BD culture• Marketing out-reach• Events• Uniform bonus scheme
Service innovation• Biotech• E-Village• IQ • Cello Health Logic• Pulsar Health• Signal digital capacity
Global presence• Hub offices in New York, Pennsylvania,
London and Farnham• USA 45% of Cello Health 2017 gross
profits• 24 out of 25 top pharma as clients
Collaborative culture• Within Cello Health• With Cello Signal• Cello Academy• Centres of excellence
GROUP PLC
A unique fusion of advisory and delivery capability under one global lead brand across pharmaceuticals, biotech, devices and OTC
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KEY OPERATIONAL
DEVELOPMENTS
Increasing US focus
45% of Cello Health 2017 gross profit (US is c. 70% of overall health services market)
Balance between pre and post launch work
C. 50/50%
Increased weighting to biotech and early stage
Acquisition of Defined Health
Addition of digital market activation capability
14% of Signal 2017 gross profits now health related
Increasing and strengthening our range of servicesDefined Health, Cello Health Advantage, partnerships
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GROWTH DRIVERS
• Our clients’ markets are healthy- Global R&D spend growing steadily at c. 2.4% and forecast to reach
$182bn* by 2022- Prescription drug sales are forecast to grow at an annual compound rate of
6.5%, eventually hitting $1.06trn worldwide in 2022*- Clinical trials registrations increasing by 13% 2015-2016 **- 46 new drug approvals in 2017, 24 in 2008 (FDA)***
• Ongoing growth of outsourcing trend by clients- Pricing pressure- Technology- Data- Regulation- Best practice- Specialist expertise vs. mission critical challenges
*Source: EvaluatePharma 2017
**Source: EvaluatePharma 2016
***Source: fda.gov 2017 New Drug Therapy approvals
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GROWTH DRIVERS
Strong product pipeline: 20k+ additional pipeline opportunities sourced from repurposing existing assets, data mining existing discovery asset banks, further fueled by innovation and new discoveries
Better diagnosis combined with a large level of clinical unmet need and poor compliance drives accelerated short term demand
Ageing population and growing population drives long-term demand
Market revolution from Rx to Cx (consumer health)
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KEY CLIENTS Firm Projected R&D Spend by 2022* $BN Cello Health client
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
*Source: EvaluatePharma 2016
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COMPETITIONMajor Quoted Companies Market Cap 2017
($m)
Quintile IMS Holdings 17,600
Inc Research Holdings/Inventiv 7,400
ICON Plc 5,349
Medidata Solutions, Inc 4,473
PAREXEL International Corporation (now acquired) 4,467
Catalent, Inc 4,223
UDG Healthcare Plc 2,105
Medical Innovations Holdings, Inc 1,868
Huntsworth Plc 300
• Increased complexity and market growth are driving activity by larger players
• Highly fragmented growth market for service supply• Rapid consolidation amongst larger players• Entry barriers increasing• Private equity financing roll-ups of smaller providers
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CELLO HEALTH GROUP
GROWTH IN 2018/19
• Continued addition of professionals, particularly in the US
• Continued expansion in core hubs – New York, Yardley, Farnham and London
• Push in quantitative research – IQ
• Launch of Pulsar Health product by Cello Health Logic
• Collaboration with Signal Health to deliver digital communication solutions in US and UK
• Ongoing acquisition programme, with US focus
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SUPPORTING CELLO HEALTH
IN DIGITAL
• Pharmaceutical and biotech clients increasingly using digital engagement processes, both to gather data and disseminate data
• A range of specialist digital competitors emerging (Huntsworth plc)
• Too expensive for Cello Health to acquire businesses of scale in this space
• Cello Signal already has active healthcare clients in addition to deep technical capability
• Major strategic initiative to leverage these skills into Cello Health
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SIGNAL’SPRIMARY
CLIENT FRANCHISES
Healthcare Technology and Entertainment
Utilities and Financial Serviceshttps
NFP and Charities
© CELLO GROUP PLC
FINANCIAL REVIEW
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FINANCIAL HIGHLIGHTS
• Gross profit up 10.6% to £102.5m (2016: £92.7m)
• Like-for-like gross profit up 2.5% (constant currency: 1.6%)
• Headline profit before tax up 11.9% to £11.4m (2016: £10.2m)
• Headline operating margin 11.7% (2016: 11.5%)
• Headline earnings per share down 8.4% at 7.93p (2016: 8.66p)
• Successful fund raise in January 2017 raising £14.2m (net)
• Two successful acquisitions in the US
• Good underlying cash generation
• Net cash £1.6m (2016: debt £5.1m)
• Headline tax rate drops in 2018 by c. 3 percentage points
• Full year dividend per share up 2.9% to 3.50p (2016: 3.40p)
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SEGMENTAL ANALYSIS
2017 2016Headline
Gross Profit
£m
Headline Operating
Profit£m
Margin %
Headline Gross Profit
£m
Headline Operating
Profit£m
Margin %
Cello Health 60.2 10.6 17.7% 47.6 8.6 18.1%
Cello Signal 41.0 3.9 9.5% 43.6 4.5 10.3%
Sub total 101.2 14.5 14.3% 91.2 13.1 14.4%
Central cost - (2.7) - - (2.6) -
Group 101.2 11.8 11.7% 91.2 10.5 11.5%
• Like-for-like constant currency gross profit growth in Cello Health at 9.2%• Like-for-like constant currency gross profit decline in Cello Signal at 6.8%• 29.5% of group gross profit earnt in the US (2016: 23.3%)
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CELLO HEALTH
• Like-for-like gross profit up 10.7%• Constant currency like-for-like gross profit up 9.2%• Operating margin remains competitive at 17.7% • Overall client base growing, especially in USA• US gross profit rises to 45.1% of total (2016: 35.1%)• Collaborative wins grow strongly behind the Cello Health brand• Defined Health acquisition in January 2017• Cello Health Advantage acquisition in July 2017• Both acquisitions performing well
2017£’000
2016 £’000
% change
Headline gross profit 60,150 47,605 26.4%
Headline operating profit 10,639 8,635 23.2%
Margins 17.7% 18.1% -
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CELLO SIGNAL
• Like-for-like gross profit decline of 6.5% (2016: growth of 5.5%)• Constant currency like-for-like gross profit decline of 6.8%• Operating margin 9.5% (2016: 10.3%)• Tough comparator with large one-off projects in 2016• Trading issues within US research operations now resolved• Pulsar growth to 346 clients (2016: 257), £0.5m MRR• Rapid growth from Signal Health
2017£’000
2016 £’000
% change
Headline gross profit 40,961 43,615 (6.1%)
Headline operating profit 3,872 4,490 (13.8%)
Margins 9.5% 10.3% -
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INCOME STATEMENT
2017£m
2016£m
Headline operating profit 11.8 10.5
Interest (0.4) (0.3)
Headline profit before tax 11.4 10.2
Restructuring costs (1.9) (1.2)
Credit/(charge) for VAT received/(payable) 0.2 (1.8)
Start-up investment/biotech team (1.4) (2.1)
Acquisition costs (0.2) -
Amortisation of intangibles (0.5) (0.3)
Acquisition related remuneration (1.4) (1.2)
Share options (0.4) (0.4)
Goodwill impairment - (4.9)
Statutory profit/(loss) before tax 5.8 (1.7)
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KEY NON-HEADLINE
INCOME STATEMENT
ITEMS
ITEM £m COMMENT
Restructuring costs 1.9 US Consumer research; Signal property moves
VAT received 0.3 Issue now closed
Start-up investment 1.4Pulsar US; Cello Health Consulting in US (now in headline)
Amortisation 0.5 Slightly higher due to acquisitions
Acquisition related remuneration 1.7 Slightly higher due to acquisitions
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CASH FLOW AND NET DEBT
2017£m
2016£m
COMMENT
Operating net inflow pre VAT settlement 4.8 11.7
VAT settlement - (5.2)
Net cash inflow from operating activities 4.8 6.5 See overleaf
Interest (0.4) (0.2)Unwinding of prior year working capital surplus, slightly higher LIBOR
Tax (2.1) (1.7) Tax rate dropping in 2018
Capex (1.8) (2.2) Office moves in prior year, £0.4m on Pulsar
Acquisitions (5.3) - 2 acquisitions and deferred settlement
Fund raise 14.2 - Cash raise in January 2017
Share option proceeds 0.2 0.3
Dividends (3.6) (2.6) Full year cash impact of new dividend policy
Net debt movement 6.0 0.1
Opening net debt (5.1) (4.2)
Foreign exchange differences 0.7 (1.0)
Closing net cash 1.6 (5.1) Facilities of £20m; renewed until March 2022
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OPERATING CASH
CONVERSION
2017£m
2016£m
COMMENT
Headline operating profit 11.8 10.5
Depreciation 1.3 1.3
Amortisation 0.4 0.4
Headline EBITDA 13.5 12.2
Cash flow from operations 4.8 6.5
Cash impact of non-headline items 3.6 3.3 Start-ups restructuring
VAT settlement/receipts (0.3) 4.9 2016 VAT settlement
Deferred remuneration 2.3 0.2 iS Health settlement
Headline operating cash flow 10.4 14.9
% conversion of headline EBITDA 77% 123% 2017 shows reversal of underlying 2016 surplus
• Good underlying operating cash characteristics
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BALANCE SHEET 31 December 2017£m
31 December 2016£m
Goodwill 73.0 69.9
Intangible assets 1.2 0.7
Fixed assets 2.8 2.7
Deferred tax assets 1.1 0.7
Non-current assets 78.1 74.0
Current non cash assets 54.5 46.8
Cash 13.0 7.4
Creditors <1 year (49.9) (49.2)
Net current assets 17.6 5.1
Creditors >1 year (12.8) (12.5)
Net assets 82.9 66.6
• Total maximum commitment of $6.3m payable over 3 years from 2019-2021, payable largely in cash
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DIVIDEND
TAXATION
• Full year dividend increased 2.9% to 3.50p (2016: 3.40p)
• 11 year unbroken full year dividend growth record
• Headline tax rate in 2017 of 28.2% (2016: 25.7%)
• Dropping in 2018 by c. 3 percentage points (US changes)
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GROUP SUMMARY AND
OUTLOOK FOR 2018
• Strong growth in fee income in Cello Health
• Rapidly increasing exposure to US market, organically and via acquisitions
• Leverage of Cello Signal digital capabilities into healthcare
• Strong balance sheet
• Dividend continues to grow
• Good 2018 outlook based on current pipeline
• Change of name to Cello Health Group plc
© CELLO GROUP PLC www.cellogroup.com
CONTACT US:
Cello Group plc
11-13 Charterhouse Buildings
London
EC1M 7AP
www.cellogroup.com
MARK SCOTT, Chief [email protected]
+44 (0)20 7812 8462
MARK BENTLEY, Group Finance [email protected]
+44 (0)20 7812 8463